Dollar Climbs as Fed Chair Hints at Potential Rate Hikes

Federal Reserve Chair Kevin Warsh reignited speculation about potential future interest rate hikes during his first Jackson Hole speech, prompting a rise in the US dollar.

In his address, Warsh emphasized that the Fed would still have work to do if inflation doesn't clearly cool down. He also hinted at financial conditions not being restrictive enough, which is central-bank speak for 'policy may need to tighten.'

Markets quickly adjusted to this new information, lifting the odds of at least a quarter-point hike at September's Fed meeting to about 50% from roughly 35%. This shift in expectations was reflected in currency markets, with the dollar index rising 0.46% to 99.57.